2020 (2) TMI 1458 - HC - VAT / Sales Tax

Seeking to declare the definition of Sec. 2(15)(ix) to Explanation I and Sec.2(33)(vi) to Explanation I of Tamil Nadu Value Added Tax Act, 2006, as void, unconstitutional, inoperative and unenforceable and the recoveries pursuant thereto are without authority of law and infringe Article 19(g) and 265 of the Constitution of India - Doctrine of mutuality - HELD THAT - Very recently the Hon'ble Supreme Court has settled the issue in the case of STATE OF WEST BENGAL ORS. VS. CALCUTTA CLUB LIMITED, 2019 (10) TMI 160 - SUPREME COURT . The issue before the Hon'ble Supreme Court was whether the judgment and order passed by the Division Bench of the Hon'ble Calcutta High Court affirming the view expressed by the West Bengal Taxation Tribunal and disposing of the appeal preferred by the dealer along with other connected appeals holding, inter alia, that the assessee, the Calcutta Club Limited, was not liable for payment of sales tax under the provision of the West Bengal Sales Tax Act, 1994. In the light of the recent decision of the Larger Bench of the Hon'ble Supreme Court, we have to necessarily interfere with the show cause notice issued by the Assessing Officers proposing to levy tax on the writ petitioners. However, we are convinced of the fact that there may be other issues, which may require to be adjudicated by the Assessing Officer and since the prayer sought for in these writ petitions are for declaratory relief, we dispose of these writ petitions by holding that the law laid down by the Hon'ble Supreme Court in the case of Calcutta Club Limited, holds good and it shall enure in favour of the petitioners' club. The petitioners are permitted to give suitable reply to the notice issued by the Assistant Commissioner and in the light of the decision of the Hon'ble Supreme Court, the theory of mutuality will apply to both incorporated and unincorporated clubs and this issue should be taken into consideration by the respective Assessing Authorities - petition disposed off.

Summary

Issues:
Challenge to the validity of certain sections of the Tamil Nadu Value Added Tax Act, 2006 under the Constitution of India, specifically Article 19(g) and 265.

Analysis:
The petitioner sought a writ of declaration to declare certain sections of the Tamil Nadu Value Added Tax Act, 2006 as void, unconstitutional, inoperative, and unenforceable, arguing that the recoveries made pursuant to these sections infringe upon Article 19(g) and 265 of the Constitution of India. The Special Government Pleader for the respondents took notice of the petition.

The Court noted that the Hon'ble Supreme Court, in a recent judgment in a different case, had settled an identical issue to the one raised in the present writ petition. The Supreme Court's judgment clarified the application of the doctrine of mutuality to members' clubs after a specific constitutional amendment. Following this decision, a Division Bench of the High Court disposed of a batch of writ petitions by upholding the doctrine of mutuality for both incorporated and unincorporated members' clubs. The Court directed that the Assessing Officers should not levy tax on the petitioners based on the show cause notice issued, as the law laid down by the Supreme Court in the previous case would apply to the petitioners' club.

Both parties agreed that the issue raised in the present writ petition was covered by the decision of the Division Bench in the earlier batch of writ petitions. Consequently, the petitioner was permitted to respond to the notice issued by the Assistant Commissioner, with the understanding that the theory of mutuality would continue to apply to both incorporated and unincorporated members. However, other issues raised in the petition were to be adjudicated by the Assessing Officer, as the relief sought was declaratory in nature. The Court disposed of the writ petition with these observations, without imposing any costs, and closed the connected writ miscellaneous petitions.